Question

What is the general rule for how MLB players are controlled by their team in terms of arbitratiin and free agency?

Answer 1

Defining salary arbitration eligible players

MLB utilizes a salary arbitration system known as final-offer arbitration. Under the current collective bargaining agreement between the MLB and the MLBPA, players are separated into three categories: (1) pre-arbitration players; (2) players eligible for salary arbitration; and (3) free agents. These categories are based on the player's service time (i.e., the number of years and days of major league service a player has in their career). A team has the contractual rights to a player until that player has six years of service time and becomes a free agent. A pre-arbitration player will generally be a player who has less than three years of service time while a player who has at least three, but less than six years of service time will be eligible to enter the salary arbitration process.

Additionally, there is a special class of players, called "Super 2s". A Super 2 is a player who has between two and three years of service time, has at least 86 days of service time during the second year and ranks in the top 22 percent of players who fall into that classification. A Super 2 player will have three years as a pre-arbitration eligible player and four arbitration years while a player who doesn't earn Super 2 status will have three years of salary arbitration following their four pre-arbitration years.

Benefits of the salary arbitration process to players and teams

During the first three years of service a pre-arbitration eligible player will typically make somewhere around the major league minimum salary. However, once the player accrues enough service time to be eligible for salary arbitration. This benefits the player because that player now has some leverage to earn a salary that has at least some basis in that player's performance. The team is benefited because while the player will receive a salary increase, the player will still likely earn a salary lower than their true value on the free agent market. This is important for a team because the team to either save money or to utilize the savings on other players.

Filing for salary arbitration

A player eligible for salary arbitration has to file by Jan. 12. Once the player files, the player and team will exchange salary offers by January 16. At this point, the player and team have the opportunity to come to an agreement on a specific figure for the upcoming season prior to the hearing. If the player and team are unable to come to an agreement prior to the scheduled hearing, the player's salary will be determined by the arbitration panel. These hearings occur between February 1 and February 21.

Navigating the salary arbitration hearing

During the salary arbitration hearing, both the player and the team will present their case before the arbitration panel. Following the hearing, the panel will choose between the player's and the team's salary offer. Because the panel has to choose between one of the two offers, the player and team are both forced to present reasonable offers as the panel will choose the offer that is closer to what they believe is the player's true arbitration value.

The information the player and team can use during the hearing to present their case is governed by Article VI, Section E, Part 10 (a) & (b) of the CBA. This information includes the player's contribution to the team during the past season (e.g., the player's on-field performance and other qualities such as leadership and fan appeal), the length and consistency of the player's career contributions, the player's past compensation, the existence of any physical or mental defects, the team's recent performance (e.g., the team's record, improvement and attendance) and comparative baseball salaries.

The panel gives the most weight to each side's presentation of comparable baseball salaries. Here, the player and team can only compare the contracts of players whose service time does not exceed one annual service group above the player's service group. For example, Yankees starting pitcher Michael Pineda, who is entering his second year of salary arbitration, would be compared to other starting pitchers who were also entering their second year of salary arbitration.

Information the panel cannot consider during the hearing includes the financial position of the team or player, testimonials or press comments regarding the team's or player's performance, prior contractual negotiations between the team and player, any costs associated with the salary arbitration process (i.e., attorney's fees), and salaries in other sports or occupations.

Justin P. Sievert, Esq. is the founder/principal of Sievert Collegiate Consulting, a professor of sports, business and labor and employment law at Davenport University and is a contributing writer on sports law and sports business issues for Sporting News. He is an attorney licensed to practice in Tennessee, North Carolina and Florida and has focused his practice on higher education and sports law. Justin has a Bachelors of Arts (B.A.) from Union College (NY), a Master's Degree in Education (M.ED)

Among the most confusing things for baseball fans is free agency. It's a complicated set of rules that's been negotiated in labor agreements between owners and players. To make matters even more complicated the formula is changed ever time there's a new agreement.

History of Baseball Free AgencyFrom the 19th century through 1976, baseball players were bound to one team for life because of the reserve clause. Teams could renew contracts for one year for as long as they wanted to keep the player.

Free agency began in 1969 when longtime Cardinals outfielder Curt Flood was traded to Philadelphia and refused to report. He appealed to the U.S. Supreme Court but lost, but his case put in place an arbitration system for players' union and owner disputes.

In 1975, pitchers Andy Messersmith and Dave McNally played without a contract, arguing that their contract could not be renewed if it was never signed. An arbitrator agreed, and they were declared free agents. With the reserve clause effectively abolished, the players' union and the owners developed an agreement regarding free agency that the teams and players would follow.

After a Player Is Drafted

A player is bound to the team that drafts him for three seasons. Contracts are renewed on a year-to-year basis.

After three years, a player must either be on a team's 40-man roster, which means he has a major league contract, or he is eligible for what is called the Rule 5 draft (see below). Once he has played for three seasons and is on the 40-man roster, the team then has "options" on the player. They can send him to the minors and still keep him for three additional seasons with automatic contract renewals. Each player has three option years and can be sent up and down from the minors as many times as teams see fit during that period.

A player with three years or more service cannot be removed from the 40-man roster without his permission. The player can also opt to be released immediately or at the end of the season.

A player also can elect to become a free agent whenever he is removed from the 40-man roster, starting with the second removal of his career.

Rule 5 Draft

After three complete minor league seasons, a team has to decide if they want to keep a player and must sign the player to a major-league contract (adding him to the 40-man roster).

Players who aren't placed on the roster are eligible for the Rule 5 draft. A player can be drafted by another organization for $50,000. There is a risk for the drafting team because they must keep that player on the 25-man major-league roster for the entire next season or the original team can bring him back for $25,000.

A player not on the 40-man roster and not taken in the Rule 5 draft remains under contract with his current organization. He can elect to become a minor-league free agent instead of being taken in the Rule 5 draft, but players want to be selected in the draft because it represents what could be a fast track to the majors and​ get away from a team that does not believe he belongs on the 40-man roster.

Arbitration

Once a player has been on a roster for three seasons and doesn't have a long-term contract, he becomes eligible for salary arbitration. A player with at least two years experience is also eligible provided he is among the top 17 percent in cumulative playing time in the majors of players who are between two and three years of experience.

During arbitration, the team and player each present a dollar figure to an arbitrator, who then decides for either the player or the team based on comparable wages within baseball. Oftentimes, the arbitration process leads to a compromise before the ruling.

Major League Free Agency

A player with six or more years of major-league service (on the team's 40-man roster) who is not under contract for the following season is automatically a free agent.

Teams can receive compensation for the player with a draft pick in the following year's draft in June. To receive compensation, the team must offer the player salary arbitration.

It is then up to the player to either accept arbitration or sign with another team. The team must offer salary arbitration to the player by early December or the team will not be allowed to negotiate with or sign the player until the following May 1. After arbitration is offered, the player has two weeks to accept or refuse salary arbitration. If it is refused, the player can only negotiate with the club until Jan. 7. after which no more negotiation can take place until May 1.

Top free agents are classified as Type A (the top 20 percent at their position as determined by the Elias Sports Bureau), and Type B (between 21 and 40 percent at his position). If a Type A free agent who had been offered arbitration signs with another team, the team receives two first-round draft picks the following June. The picks are either a first- or second-round pick of the new team (depending on a team's record the previous season) and a "sandwich" pick between the first and second rounds. Type B free agents earn just a "sandwich" pick.

If there are 14 or fewer Type A or Type B free agents available, no team can sign more than one type A or B player. If there are between 15-38, no team can sign more than two. If there are between 39 and 62, there's a limit of three. However, teams can sign as many Type A or B free agents as they've lost, regardless of the limits above.

Other Rules

A player with five years or more major-league service who is traded in the middle of a multi-year contract can, during the offseason, require his new team to either trade him or let him become a free agent. If the player is eventually traded, he's not eligible to demand a trade again under the current contract and loses free agency rights for three years.